Free e-Newsletter
Tom Donohue, U.S. Chamber of Commerce on outsourcing and offshoring
In this exclusive interview, Thomas J. Donohue, President and CEO of the U.S. Chamber of Commerce shares insight with VentureOutsource.com.
Read what Mr. Donohue says about the loss of U.S. jobs; America as a competitive power; global economics of contract manufacturing outsourcing and offshoring, foreign manufacturing productivity and product quality serving global markets, and more.
Transcripts from that discussion follow.
VentureOutsource.com: The United States Chamber of Commerce interacts regularly with leaders of the nation's largest associations. Looking at the product manufacturing sector in particular, can you please share your thoughts on what some industry associations are doing to effectively communicate some of the advantages of outsourcing and offshoring for our society and how U.S. companies are looking to find ways to become more competitive and are able to do so on an international level?
Donohue: By taking advantage of greater access in new markets, U.S. companies, particularly manufacturers, have been able to strengthen their bottom lines; reduce consumer prices, focus on more profitable operations, and create new and better jobs here at home.
The Chamber issued two landmark reports on the topics of outsourcing and U.S. competitiveness. Our 2004 report titled "Jobs, Trade, Sourcing, and the Future of the American Workforce," found little hard data to support fears about outsourcing and claims of an impending exodus of U.S. jobs overseas. Our 2006 follow-up report, "Global Engagement: How Americans Can Win and Prosper in the Worldwide Economy", found that overwhelmingly, Americans benefit from the nation's openness to trade; foreign investment, immigrants, and international visitors.
The 2004 report also found U.S. exports directly supported one in every five manufacturing jobs here at home. The U.S. manufacturing sector has been sourcing around the world for over 30 years, during which time our manufacturing output has more than doubled. Some manufacturing workers have lost jobs due to technological advances as well as changes driven by outsourcing and the just-in-time production process. We have supported strong retraining programs to help these workers and will continue to do so.
 |
Thomas J. Donohue President and CEO United States Chamber of Commerce |
The bottom line: outsourcing has made the manufacturing process more efficient and productive, which has helped consumers and our overall economy. Outsourcing allows manufacturers to buy components from a vast array of suppliers, lowering costs for the manufacturer who is able to pass on the savings to consumers.
Outsourcing has also made us work smarter and made workers able to take advantage of one of the United States greatest assets - the spirit of innovation. The changes in the manufacturing sector have resulted in some of our best workers improving their workforce skills and in many cases, transitioning to careers in high-technology fields. With the help of the Federal Trade Adjustment Assistance programs, many of these workers have been retrained and are now working in high-tech industries.
For all of these reasons, the Chamber strongly believes manufacturing and service companies alike should have the freedom and flexibility to source and trade across our country-and around the world. We are not in the business of telling companies that they should outsource, but we are fighting to preserve their right to do so. Flexibility is one of the American economy's greatest strengths, and we are working hard before governments and regulators everywhere to preserve it.
       |
How mis-informed can one
How mis-informed can one individual be to publish such rubbish. Having come from a fortune 50. I've seen the forces of off-shoring at work. I lost my position as an exec eight years ago and 3,000 out of 5,000 of our employees lost their jobs as well - much off-shored to Eastern Europe and India.
Corporations have rallied around the off-shoring maypole to get their one-time cost reductions and prop up their financial reports.
Today's economic data clearly exemplifies that in spite of the impressive statistical data and the quality references presented, incorrect conclusions can be easily interpreted. What we see in the US is more US unemployment of highly educated individuals (not just manufacturing), great corporate financial results for companies that are in their 1st or 2nd year of off-shoring due to the windfall reduction in operating costs, loss of US intellectual property as ideas and development are now performed off shore, failing consumer confidence due to loss of jobs and their inability to meet their own credit & loan obligations and lastly the small group of select executives defining their own compensation packages and preparing to use their golden parachutes.
The perceived benefits of off-shoring is not long-term - it can only be short term (a couple of years). There is no long-term benefit to the US if jobs are lost, retooling and reeducation costs far out weigh the willingness of parties to pay those costs. Lets face it, would your company pay the education costs to reeducate you at Yale or MIT? Of course not. So the retooling can only be for less desirable, lower paying jobs. And pretend that your company (or government) did pay for your re-education. Do you think your new employer would pay you your old salary? Of course not, he'd try to pay you $1K-$5K more than a new college graduate. And if you were 45+ years old, what company will invest in you for the long term? Let's be serious - Let's be honest, the system is broken and there's no one around to fix it. .
Please make sure you
Please make sure you distinguish between outsourcing (outside provider) and off-shoring (overseas cheap, low quality labor). Any wonder who he works for? What a bunch of bunk! Our state has lost over 80k manufacturing jobs, and where are these rocket scientist jobs that these people are being re-trained to perform? I'll tell you where...McDonald's. I think we need a law that requires the CEO to be located where the majority of their workers are located, like India, where there were a record number of bombings last month...or better yet, Pakistan. It's time to off-shore CEO jobs, for lower cost and better performance. Based on this and the past few year's results, American companies could do very well by off-shoring CEO jobs to India and China.
Smoke and mirrors. Working
Smoke and mirrors. Working for a huge technology company, I have seen the erosion of around 60K-70K US jobs under Mr. Donahue's guise. Most of those effected find a downward spiral of offerings on the job market, and nearly all end up in a worse position. Retraining has worked out for some. Yet, most do not qualify due to the loopholes. Those that do are not offered retraining into high-tech, but rather service industries. I am not for protectionism, but I am for retaining jobs that support a good standard of living which includes secure incomes that allow hard working folks to pay their mortgages and we all should now understand that mortgage defaults are a bad thing.
Maybe Mr. Donahue should evangelize the notion for balance and sustaining a good standard of living here and applying that culture to the rest of the world. We are now seeing the effects of everyone running to the outsourcing side of the boat. We certainly don't need any more smoke and mirrors which only serve to line the pockets of a certain few privileged ones.
MD
Apparently, Mr. Donahue
Apparently, Mr. Donahue hasn't been following the jobless rate which continues to increase. Maybe it's time to outsource his job.
Post new comment
Comments are reviewed by the administrator and published after approval. Please keep your comments appropriate and on topic.
Mr. Donohue has not said
Mr. Donohue has not said outsourcing is right for all businesses. However, what he does say is there can be benefits in the right situations; both to companies in industry plus, for buyers of products and services these companies offer -- in terms of higher quality and lower prices.
Companies that lose jobs and market share to other companies (domestic or abroad) should look in the mirror before pointing fingers.
Car enthusiast and show biz entertainer Jay Leno often cites Detroit for making poor quality cars that people don't want to buy. For the most part, I agree. Many of the cars coming out of American factories are poorly designed and it seems they're engineered more so for after-market parts sales (read: they break down frequently). Add to this, high union wages with worker job protection clauses written in contracts and its a bad recipe for longevity in a competitive, global business model.
The world is changing, indeed.
Mark